Author: timzz
In a commentary published by ChainCatcher, timzz says blockchain has become the new era’s equivalent of the tools that once underpinned dollar dominance. In his view, large-scale tokenization of U.S. equities and the future issuance of hybrid assets — instruments that combine traditional assets with crypto assets — are opening a new growth phase for DeFi.
He writes that trading protocols are the first to benefit when new assets come to market. As one example, he says Uniswap’s fully diluted valuation, or FDV, has tripled over the past few months after its fee switch was turned on. The article then turns to a broader question: after trading captures the first wave, where does DeFi go next, and what is its “holy grail”?
Why DeFi is needed
Before discussing DeFi itself, timzz starts with the reason he believes it matters.
He says the dollar’s global position was historically maintained by hard power and narrative power. He points to the dollar’s share of global foreign exchange reserves, writing that the figure fell from 65% to 58% over the past decade, yet still leaves the dollar as the dominant international reserve currency.
The article also lists U.S. fiscal figures. Over the past 10 years, U.S. debt issuance has reached $40 trillion, according to the piece. It says the fiscal deficit was $1.8 trillion in 2025 and will exceed $2 trillion in 2026. Timzz adds that the deficit’s share of GDP is far above GDP growth, which he places at about 5.8% versus roughly 1.9%-2.2%, and says some economies have already started to derisk away from the dollar and U.S. Treasuries.
Against that backdrop, he argues blockchain could serve as another “life-extending potion” for the dollar system. In his telling, the U.S. can use blockchain technology to distribute dollars, Treasuries, and dollar-linked assets, while stablecoin issuance, trading, lending, and derivatives in DeFi form the main active ingredients in that process. He links to a longer discussion here: https://x.com/timzz_sleep/status/1942134973584040433.
Timzz writes that development is rarely linear. He says the market was already looking to STO, or Security Token Offering, in 2017 as a possible new narrative and capital source for the digital asset industry. In his account, that theme only truly began in 2026, when AI stocks surged and Binance and Robinhood pushed stock tokenization.
He also notes that in recent weeks both the U.S. Securities and Exchange Commission, or SEC, and the Commodity Futures Trading Commission, or CFTC, have been releasing innovation exemption proposals. On the Clarity Act, he says his view is “better late than never.” In the article’s own framing, the question now is not whether this new financial infrastructure should be built, but who will build it.
Five core business models in DeFi
Timzz then lays out what he sees as DeFi’s five core business models: stablecoin and asset issuance, lending, asset management and yield aggregation, trading, and derivatives.
Using DefiLlama’s protocol revenue ranking for the top 15 projects, he says five of them are stablecoin issuers, and together they account for 79.8% of the top 15’s 30-day revenue. DEXs come next at 11.8%. In his view, trading tends to capture the first growth dividend from an issuance wave.
In derivatives, he says Hyperliquid stands alone at 6.6%. Lending protocols account for 1.8%. He explains the smaller share by pointing to lending economics: protocol profit comes from the spread between borrowing and lending rates, while most of the interest paid by borrowers goes to lenders, with only part retained by the protocol.
As for asset management and yield aggregators, he says they have not yet entered the top 15 because the market is still in the early stage of a bull cycle. He expects protocols resembling money market funds in traditional banking to enter the top 15 later on.
The “holy grail” is the power to issue money
The article’s central argument is direct: DeFi’s holy grail is monetary issuance.
Timzz says revenue from stablecoin and asset issuance comes directly from reserve assets or from interest on overcollateralized loans. Once scaled, the marginal cost is low, and first-mover advantage matters.
By issuance size, he identifies the top three as Tether, Circle, and Sky.
He describes Circle and Tether’s model as one backed by short-dated U.S. Treasuries, dollars, and similar collateral, with corresponding stablecoins issued against those reserves. Most protocol profit, he says, comes from SOFR. In a high-rate environment, that can produce strong earnings. But he also notes the possibility of a repeat of conditions around 2021, when SOFR and short-term Treasury yields were near zero, which would materially weaken profitability.
Sky, by contrast, is presented as a DeFi-native model built mainly on overcollateralization. Timzz says Sky has increased the share of real-world assets, or RWA, in its collateral mix in recent years because SOFR has moved higher. Even so, he argues Sky is more flexible than Tether and Circle because it can shift between RWA and DeFi depending on market conditions. He also says the subDAO governance structure gives the protocol more resilience.
He frames stablecoins through an “impossible trinity” of decentralization, capital efficiency, and price stability. In his view, Tether, Circle, and Sky each have strengths within that triangle, but only Sky represents a relatively decentralized model rather than a single-entity structure.
“Central banks” issue assets, “commercial banks” distribute them
The article goes on to say that while issuance is the holy grail, distribution after issuance is just as important for DeFi’s “central banks.” That distribution includes stablecoin liquidity, trading, lending, and payments.
For USDT, timzz says the distribution edge comes from first-mover advantage. Trading across major centralized exchanges, or CEXs, and payment usage outside North America form part of its moat.
For USDC, he points to distribution through Coinbase and derivatives trading on Hyperliquid. The question he raises is whether that position can hold without implicit subsidies, and what Circle’s moat will look like once many versions of “USDC” exist in the market.
For USDS and DAI, he says distribution comes from deep integration across DeFi channels and expansion through subDAOs such as Spark. In his description, the subDAO model allows Sky to retain the role of a “central bank” while also mobilizing independent teams to support the broader expansion of USDS and DAI.
He describes Spark as a “commercial bank” built on top of that “central bank.” According to the article, Spark has developed a relatively complete capital distribution model through the Spark liquidity layer and Sparklend lending. Using USDS as an intermediate layer, it also builds a foreign-exchange conversion layer for stablecoins and provides liquidity conversion for newer stablecoins such as RLUSD and pyUSD.
His outlook for the next four years
Timzz closes by saying DeFi is only getting started. He expects the next four years to be a period of deep integration between DeFi and U.S. finance. In that framework, the U.S. would use blockchain to distribute dollar-based assets, while some profits generated in U.S. equities would rotate into BTC and gold, creating an ongoing cycle.
On that basis, he argues that DeFi “central banks” and the “commercial banks” built around them are heading into a major growth period.